Real Estate Investing: What is a Tranche, and What Does it Mean for You?

Tranche, a French word meaning “slice,” is a financial term used to describe a unique piece of a larger, single transaction. Typically this division is based on how much risk the transactions, typically in the form of securities (tradable assets), carry. It’s a technique employed in the financial world to better package and sell assets like loans — often backed by mortgages — to investors which are looking for a particular form of cash flow and is particularly intertwined with the real estate world.